A United Parcel Service (UPS) truck on delivery is pictured in downtown Los Angeles, California October 29, 2014. REUTERS/Mike Blake
(Reuters) – United Parcel Service Inc UPS.N., which is the world’s largest package delivery company, beat second-quarter profit estimates on Wednesday, driven by increased demand in domestic shipment from e-commerce companies.
The rapid rise in online shopping has been a boon for package delivery companies and UPS has been spending heavily to cut down the extra cost of delivering to households that on average receive fewer packages at a time than businesses.
“Demand for faster delivery is a structural change in our industry,” said UPS CEO David Abney. “Anticipating this change, our additional air capacity and modernized network enabled this growth to have a positive impact on profitability and positions UPS well to serve the growing needs of the market.”
The U.S.-based company said its domestic segment generated significant volume growth across products led by a more than 30% surge in its next day delivery program, Next Day Air volume, which got a boost from e-commerce deliveries.
Revenue at the segment rose 7.7% to $11.15 billion.
Net income for the second quarter ended June 30 was $1.69 billion, or $1.94 per share, compared with $1.49 billion, or $1.71 per share, a year earlier.
Analysts had expected a profit of $12.92 cents per share, according to IBES data from Refinitiv.
Revenue rose 3.4% to $18.05 billion.
Reporting by Lisa Baertlein in Los Angeles and Rachit Vats in Bengaluru; Editing by Shinjini Ganguli